Manhattan Beach Fiscal & Economic Impact Findings Summary memo - 10-23-24.docx
M EMORANDUM
To: Jaehee Yoon, AICP
Senior Planner
City of Manhattan Beach
From: Jason Moody, Thomas Gonzales, and Chinmay Damle
Subject: Manhattan Beach Long Term Outdoor Dining Program Study Fiscal & Economic Impact Findings Summary
Date: October 2024
This memorandum summarizes findings from Economic &
Planning Systems, Inc. (EPS) related to the economic and fiscal impacts of outdoor dining in Manhattan Beach. EPS studied these impacts as part of an MIG-led consulting team, which has been supporting the City of Manhattan Beach to evaluate options for a potential Long Term Outdoor Dining Program. EPS completed its analysis using City-provided data on parking revenue and sales tax revenue, as well as information collected through a series of stakeholder interviews.
EPS’s analysis focused primarily on understanding how the Temporary Outdoor Dining Program (“Temporary Program”), which operated from mid-2020 to February 2023, impacted sales tax and parking revenue in the City. EPS looked specifically at a “Study Area” that included Downtown Manhattan Beach and North Manhattan Beach, which are shown in Figure 1.
Figure 1: Study Area Locations (North Manhattan Beach and Downtown)
Memorandum: Long Term Outdoor Dining Program Study Fiscal & Economic Impact Findings Summary Page | 2
Key Findings
EPS’ analysis focused on comparing a six-month period before the Temporary Program ended, from April to September 2022 (“Q2-Q3 2022”), with a period one year later, from April to September 2023 (“Q2-Q3 2023”), which was after the program ended.
Key findings of the EPS analysis include the following:
• Outdoor dining appears to have had a substantially positive fiscal and economic benefit on the City and local businesses overall. Under the Temporary Program, during which parking spaces were repurposed as outdoor dining space, business sales across all types of businesses were higher than after the program ended. Parking revenue from increased demand (more visitors) was also significantly higher, which more than offset the loss of parking revenue from the repurposed on-street spaces.
• After the end of the Temporary Program, total parking revenue (across all lots and on-street spaces within the Study Area) fell by $163,700 or 5.3 percent. This seems to indicate that the loss of outdoor dining led to fewer patrons visiting and parking in the Study Area. The drop was consistent throughout the Study Area.
• Parking revenue from on-street parking increased when spaces were “returned” to service following the end of the Temporary Program, generating an additional $79,900 or 7 percent of on-street meter revenue. Most of the additional revenue was collected on Manhattan Avenue and Manhattan Beach Boulevard in Downtown Manhattan Beach. However, this positive impact was more than offset by revenue lost in the off-street lots ($243,600 or 12.4 percent) due to the overall decrease in parking demand. • Sales tax revenue decreased for both participating and non-participating businesses after the end of the Temporary Program. Although there was a decrease in sales tax countywide, the performance of Study Area businesses was worse than both City and County trends. EPS estimated that sales tax revenue over the Q2-Q3 2023 period would have been $39,600 higher if the Study Area had matched County trends, or up to $105,500 higher if the Study Area had matched City trends.
• The Proposed Long Term Outdoor Dining Program can similarly be expected to generate strong positive fiscal and economic benefits. Based on the experience of the Temporary Program, EPS has estimated what some of the impacts may be.
Economic & Planning Systems
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Implications for Long Term Outdoor Dining
Program
EPS utilized the findings on the impact of the Temporary Outdoor Dining Program to estimate fiscal and economic impacts from a proposed Long Term Outdoor Dining Program that the City is currently considering.
It should be noted that although these estimates are based on the experience of the Study Area during the Temporary Program, it may not be entirely possible to duplicate these benefits with the Long Term Outdoor Dining Program. The results of the program may be influenced by outside, uncontrollable factors that impact business sales and parking demand, the key metrics used in this analysis. For example, retail success and business volume can be highly sensitive to small-scale changes in location, weather, seasonal variabilities, operational configurations, consumer preferences, customer experience, etc. EPS attempted to identify potential confounding factors and control for the impact of outside factors where possible—such as by comparing sales tax revenue against citywide and countywide trends and comparing the same 6-month period of the year—but there is no guarantee that the Long Term Outdoor Dining Program will have effects equivalent to the Temporary Program.
EPS has summarized the fiscal impacts, or changes in City revenues, that resulted from the City’s Temporary Program, in Table 1. The impacts are shown both overall and on a per parking spaces basis. EPS’s analysis focused on the impacts within the Study Area during Q2 to Q3 2022. Although the program format and participation varied over time, approximately 57 on-street parking spaces (51 in Downtown and 6 in North Manhattan Beach) were used for outdoor dining during most of this period. Impacts were estimated primarily by comparing parking revenue and sales tax revenue with the Q2-Q3 2023 period, during which no on-street parking spaces were used for outdoor dining (though sidewalk dining continued).
Table 2 compares the estimated impacts of the Temporary Program to those of a future, Long Term Outdoor Dining Program, under a proposed plan that would reconfigure the Study Area streetscapes to expand outdoor dining capacity on sidewalks while limiting the loss of parking supply to just 7 on-street spaces. Impacts shown assume that the fee for outdoor dining is maintained at the $3 per square foot per month rate currently charged for the Sidewalk Dining Program.
Finally, Table 3 serves to summarize the estimated economic impacts on individual businesses under both the Temporary Program and a future Long Term Program. Details on the methodology for these tables are on the last page of the Appendix presentation.
Memorandum: Long Term Outdoor Dining Program Study Fiscal & Economic Impact Findings Summary Page | 4
Table 1: Summary of Estimated Fiscal Impacts from Outdoor Dining in On -Street Parking Spaces during Temporary Outdoor Dining Program
Sources: HdL Companies, City of Manhattan Beach Finance Department, EPS
Economic & Planning Systems
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Table 2: Comparison of Fiscal Impact Estimates for the Temporary Outdoor Dining Program with Proposed Long Term Program
Memorandum: Long Term Outdoor Dining Program Study Fiscal & Economic Impact Findings Summary Page | 6
Table 3: Summary of Estimated Economic Impacts on Individual Businesses from Outdoor Dining under Temporary Outdoor Dining Program and Proposed Long Term Program
Economic & Planning Systems
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Fee Recommendations
Proposed Long Term Outdoor Dining Program
As currently envisioned, the proposed Long Term Program would largely mimic the existing Sidewalk Dining Program. EPS recommends that fees for the Long Term Program be structured with a similar monthly fee. Keeping a similar fee will provide consistency and is more likely to ensure business participation in the program. Indeed, stakeholder input confirmed that charging an equivalent fee to the sidewalk dining program would be familiar to business owners and likely perceived as reasonable and fair.
Given that the City is looking to recoup some of the costs of reconfiguring the streetscape to expand sidewalk dining, there are some additional options to consider, such as increasing the fee amount or implementing a tiered fee structure with higher rates for certain business types that generate higher sales revenue.
There are a few factors to consider in setting up a tiered fee structure. Based on EPS market research, retail rents in the North Manhattan Beach area appear somewhat lower than those in the Downtown area. The City may want to consider charging different rates between these two areas. The City could also consider charging a higher rate for businesses on the busiest retail streets, on businesses that serve alcohol, or on those open with later hours. This type of tiered fee based on location and/or type of business has precedent in Hermosa Beach and Beverly Hills. Table 4 summarizes the differences between a flat fee and tiered fee approach.
Overall, EPS recommends approaching fee increases with some degree of caution. As the rates approach or exceed the rental rates that businesses pay, the number of businesses participating may decrease. Without business participation, the City will be unable to realize the expected revenue benefits of the program. The tiered approach may be able to best increase revenue without decreasing participation from businesses that are less able to afford a higher outdoor dining fee.
Additional information is included in the Appendix presentation.
Table 4: Potential Program Fee Type Overview and Comparison
Memorandum: Long Term Outdoor Dining Program Study Fiscal & Economic Impact Findings Summary Page | 8
Parking Management Recommendations
As part of the study process, Fehr & Peers conducted analysis of the parking system in the Study Area. Fehr & Peers found that there is limited parking availability at the busiest peak times, which presents a challenge for visitors and residents, as well as business owners. Given that the proposed Long Term Outdoor Dining Program will result in the loss of 7 spaces while simultaneously increasing demand for parking, Fehr & Peers developed several parking alternatives to address this additional demand, either through demand management strategies or new supply strategies.
These strategies are presented in Table 5 with additional cost information gathered by EPS, with input from Fehr & Peers. There are a number of lower cost strategies that can be explored by the City prior to investing in expensive new supply options, though there are tradeoffs involved in any of the strategies, which are also summarized in the table.
More information is provided in the Appendix presentation.
Table 5: Cost and Evaluation of Study Area Parking Alternatives
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Appendix
Long Term Outdoor Dining Program Study: Fiscal & Economic Impact Findings Economic & Planning Systems, Inc.
The Economics of Land Use
800 Wilshire Blvd, Suite 410 Los Angeles, CA 90017
213.489.3838 www.epsys.com
Economic & Planning Systems, Inc.
The Economics of Land Use
CITY OF MANHATTAN BEACH
Long Term Outdoor Dining
Program Study
Fiscal & Economic
Impact Findings
October 2024
Economic & Planning Systems 1
CONTENTS
Study Questions, Process, and Methodology
Study Results
– Parking Revenue Impacts
– Sales Tax Impacts
Key Findings and Implications
Program Considerations / Recommendations
Parking Supply & Management Implications
STUDY QUESTIONS, PROCESS, AND METHODOLOGY
Economic & Planning Systems 3
KEY FISCAL & ECONOMIC QUESTIONS
What was the impact of temporary outdoor dining when street parking was converted …
Did it reduce City parking revenue?
– How much revenue was lost?
– Was there a larger impact on parking demand?
Did City retail sales (and tax revenue) increase?
– What was impact on dining sector / participating businesses? – What was impact on other (non-participating) retail businesses? How can we control for other factors that impact sales? – Changes in regional competitive landscape?
– Changing consumer behavior or retail trends?
– Seasonal considerations (e.g., weather)?
Historical data helps answer our questions
Economic & Planning Systems 4
BUSINESS STAKEHOLDERS ALSO PROVIDED USEFUL INPUT
4 meetings from
Dec 2023 to Jan 2024
15 business owners
Key findings:
Broad economic benefits seen from outdoor dining, with some caveats Strong enthusiasm about success of temporary program and eagerness for a long-term program—concern of losing customers to neighboring cities Recognition that positive impacts went beyond sales with benefits to community and culture in Manhattan Beach
Some concerns about program implementation (e.g., managing parking impacts on businesses, providing certainty in permit length)
Economic & Planning Systems 5
TEMPORARY PROGRAM PROVIDES GOOD CASE STUDY
“Before / After” data for Study Area helps assess
impact :
1. Street / Lot Parking Revenue
2. Sales Tax Data
Study Area = Downtown + North Manhattan Beach (North MB) (locations where on-street parking space was used for outdoor dining) in place from
Q2 2020
to
Q1 2023
Temporary
Outdoor Dining
Program
STUDY RESULTS: PARKING REVENUE IMPACTS
Economic & Planning Systems 7
ON-STREET DINING REMOVED RELATIVELY FEW SPACES
Downtown, and to a lesser degree, North MB function as shared parking districts* The amount of spaces used for outdoor dining during temporary program was small relative to total parking capacity in each district *Shared parking districts, or “park once” districts, are walk-oriented places where parking is not specifically attached to or owned by individual businesses.
Rather, the parking supply is “shared” by all businesses, and parking capacity works as a system. Most visitors park once, even if visiting multiple businesses and when parking is unavailable in one spot, most will find parking on a nearby street or in a nearby lot, but still within the district’s shared parking supply.
Downtown North MB Total
On-Street Spaces 337 108 445
Parking Lot Spaces 913 64 977
Total Parking
Capacity 1,250 172 1,422
Spaces Used for
Outdoor Dining
(as of July 2022)
51 6 57
Percent of Total
Parking Used for
Outdoor Dining
4.1% 3.5% 4.0%
North MB Study Area Downtown Study Area
Economic & Planning Systems 8
OVERALL PARKING REVENUE DOWN AFTER PROGRAM ENDED
5.3% drop in total (combined street and lot) meter
revenue from Q2-Q3 2023, relative to year prior
All but one public lot saw lower revenue*; METLOX and Civic Center lots were main drivers of lost revenue
$163,700
End of temporary program seems to have reduced overall parking demand Could be caused by less dining activity, which led to fewer visitors and people looking for parking spaces
Aligns with input heard from some residents/stakeholders, who reported visiting Downtown specifically for outdoor dining, which is no longer a draw (April to September)
*Lot 3 saw a slight increase from Q2 2022 to Q2 2023, but also decreased from Q3 2022 to Q3 2023 Economic & Planning Systems 9
DESPITE MORE SPACES, FEWER PEOPLE PARKING OVERALL
End of outdoor dining saw fewer parkers and reduced parking revenue to City Downtown:
Revenue dropped overall,
though street meters saw
more revenue
North MB:
Both street meter revenue
and lot revenue declined
Economic & Planning Systems 10
“RETURNED” SPACES DID INCREASE STREET METER REVENUE
Despite overall drop in revenue, more revenue collected along streets where meter spaces returned to service after end of temporary program 51 6
7% increase in street meter revenue over six months
from Q2-Q3 2023, relative to year prior
Most revenue increase seen on Manhattan Ave & Manhattan Beach Blvd in Downtown, which saw approx. 40 spaces return to meter operation Small increase (<1%) in revenue on Highland Ave in North MB, but overall street meter revenue in
North MB was down $9,057 (-4.5%), revealing lower total demand for street parking
$79,000
(April to September)
on-street spaces returned in Downtown (Q2-Q3 2022 vs 2023) on-street spaces returned in North MB (Q2-Q3 2022 vs 2023) STUDY RESULTS: SALES TAX IMPACTS
Economic & Planning Systems 12
SALES TAX SHARE HAS EVOLVED POST COVID
Businesses that participated in the Temporary Outdoor Dining Program account for just under 10% of citywide taxable sales.
Businesses in the combined Study Area make up just over 25% of citywide sales.
Participating businesses and Downtown businesses overall increased their share of citywide sales compared to pre-pandemic, though North MB businesses did not.
Subset of Businesses 2019 Sales Tax
Revenue*
2022 Sales Tax
Revenue*
2019 Share
of City Total
2022 Share
of City Total
Participated in
Temporary Program** $714,921 $923,906 7.4% 9.9%
Downtown $1,531,988 $2,104,681 15.9% 22.5%
North MB $317,251 $281,890 3.3% 3.0%
City Total $9,614,822 $9,343,570 100.0% 100.0%
*Adjusted for inflation.
**More than 90% of participating business sales tax is from businesses located in Downtown.
Economic & Planning Systems 13
SALES TAX REVENUE IS DOWN SINCE ENDING THE ODP
Year-over-Year (YOY) taxable
sales across Q2-Q3 2023
fell more then 6% for businesses
in Downtown and North MB
Sales downturn was consistent
across the Study Area, for both
businesses that participated in
the Temporary Program (and
operated outdoor dining in
parking spaces) as well as those
that did not
YOY Sales Tax Change* Q2 - Q3 2023
Downtown & North MB -6.5%
Downtown Only -5.8%
North MB Only -9.6%
Participating Businesses Only -7.0%
Non-Participating Businesses Only -6.2%
*Adjusted for inflation
†
† Outdoor Dining Program
Economic & Planning Systems 14
DECREASING SALES SINCE Q1 2023 IN STUDY AREA
Drop in sales YOY in Downtown & North MB started in Q1 2023 – First decline since pandemic; similar to countywide trends, but more dramatic, especially in Q3 2023
– Likely negative impact from extreme wet weather in Q1 2023 – No further local changes identified other than end of the temporary program that would account for the decline
Sales trends underperformed both the City and County in this period – Study Area businesses would have generated an additional $39,600 in tax revenue (across Q2 & Q3 2023 period) if matched with Countywide trend YOY Change in Taxable Sales* 1Q 2023 2Q 2023 3Q 2023
Downtown & North MB -5.0% -3.6% -9.4%
C itywide 6.7% 3.8% 0.1%
Co u n tyw i d e -1.5% -4.3% -2.4%
Economic & Planning Systems 15
DOWNTOWN & NORTH MB NO LONGER LEADING RETAIL RECOVERY
Start of Temporary ODP End of ODP
T12 Sales* as % of Prepandemic (2019) 1Q 2023 2Q 2023 3Q 2023 Downtown & North MB 127.6% 126.4% 123.2%
C itywide 112.2% 113.3% 113.3%
Co u n tyw i d e 123.6% 122.2% 121.5%
*Trailing 12-Month (T12) Sales refers to a one-year sales total for the quarter listed plus three previous quarters: a 12-month set of data ending with the period listed. Comparing a full 12 months of data on a rolling basis helps account for the impacts of normal seasonal fluctuations. Amounts are adjusted for inflation.
KEY FINDINGS AND IMPLICATIONS
Economic & Planning Systems 17
OUTDOOR DINING APPEARS TO HAVE POSITIVE FISCAL IMPACT
Downtown and North MB have
generated less parking and sales
tax revenue since the end of
Temporary Outdoor Dining Program.
Parking revenue after the end of
the program is down compared
with before
Sales tax revenues are also down,
generally below countywide and
citywide averages
Economic & Planning Systems 18
AND VIEWED POSITIVELY BY MOST BUSINESSES
Most business owners interviewed reported positive
outcomes:
More pedestrian traffic
More vibrant street life
And most seem to have benefited financially:
CAVEAT: we heard anecdotally that some “take-
out” retailers located near eliminated on-street
parking were negatively affected (and cold take-
out is not taxable)
In North MB, retailers reported that additional
short-term parking spaces alleviated similar
concerns
INSERT
IMAGE
Economic & Planning Systems 19
TEMP PROGRAM HAD NET POSITIVE FISCAL IMPACT ON CITY
EPS estimates* that the temporary outdoor dining program had a strong positive fiscal impact, even without any program fee revenue
Sales Tax
Revenue** from
Participating
Business
Parking
Revenue
from Lost
Spaces
Sales Tax
Revenue from
Neighboring
Businesses
Parking
Revenue from
Additional
Visits
TOTAL FISCAL
IMPACT ON CITY
(excluding program
fee revenue)
Total Annual
Revenue
(57 Spaces,
~9,975 sq. ft.)
+
$30,000 - $73,000
-
$142,500
+
$37,000 - $104,500
+
$412,000
$336,500 - $447,000
Avg. Revenue
Per Space
(~175 sq. ft. of
outdoor dining)
+
$525 - $1,300
-
$2,500
+
$650 - $1,800
+
$7,250
$5,925 - $7,850
Sources: HdL Companies, City of Manhattan Beach Finance Department, EPS *See reference slide at end for detailed explanation of fiscal impact estimating methodology. **The City of Manhattan Beach collects 1.0 % of taxable sales.
Economic & Planning Systems 20
AS WILL THE PROPOSED LONG TERM PROGRAM
One Time Costs
– ROM estimated cost of $7.5M to $12.5M to create outdoor (sidewalk) dining space fo
r an additional 610 dining seats
Ongoing Costs
– Likely similar to e xisting maintenance costs, depending on design, etc. – Minimal to no lost parking revenue
Ongoing Benefits
– Sales Tax Revenue
– Induced Parking Demand
Temporary Program
Fiscal Impact on City
Proposed Long Term Program
Fiscal Impact on City
Program
Size
830 dining seats (estimated*) across
approx. 57 parking spaces (as of mid-2022)
580 new sidewalk dining seats with 7 lost on-street
parking spaces
Up-Front
Cost
• Administrative / Permitting costs
• Wide range of dining deck construction
costs incurred by individual businesses
• Administrative / Permitting costs
• City-led project to significantly expand sidewalk
space and renovate streetscape with expected
cost of $11,000,000 - $1 6,000,000 (rough order of
magnitude)
Annual
Benefit**
• No fee revenue collected
• Sales tax increase: $67,000 - $177,500
• Parking revenue increase: $412,000
• Fee revenue: ~$219,500*** ($3/sq. ft./month @ 6,097 sq. ft.) • Sales tax increase: ~$36,000 - $95,000
• Parking revenue increase: ~$222,500
Annual
Cost
• Lost parking revenue: $142,500
• Businesses handle maintenance costs
• Program administration and enforcement
• Lost parking revenue: $17,500
• Likely minimal change in maintenance costs
• Program administration and enforcement
Net
Ongoing
Benefit
$336,500 - $447,000 per year ~$460,500- $519,500 per year Sources: HdL Companies, City of Manhattan Beach Finance Department, City of Manattan Beach Community Development Department, EPS *Assumes 12 sq. ft. per seat and 175 sq. ft. per parking spaces on average **Sales tax increase includes both participating and non- participating businesses. Proposed program estimates assume parking demand and sales tax benefits increase at same rate per dining seat as temporary program.
***Assumes that all new outdoor dining space is utilized by businesses. 21 BOTH HAVE A POSITIVE ECONOMIC IMPACT ON BUSINESSES
Temporary Program
Economic Impact on Individual Businesses
Proposed Long Term Program
Economic Impact on Individual Businesses
Analysis below shown for ~175 sq. ft space (equivalent size to one on-street parking space) Up-Front
Cost
Cost of outdoor dining furniture and
appurtenance, plus cost of building outdoor
dining deck:
• $1,500 – $15,000 per space for simplest dining decks
• Up to $65,000 for most elaborate decks on sloped streets Cost of outdoor dining furniture and appurtenance,
similar to Sidewalk Dining Program
Annual
Benefit* • Sales increase: $52,500 - $130,000 • Sales increase: $52,500 - $130,000 Annual
Cost**
• Maintenance costs for dining deck
• Maintenance costs for outdoor dining
furniture and appurtenance
• Sidewalk dining use fee cost: $6,300 per year
(f
or 175 sq. ft. dining space)
• Maintenance costs for outdoor dining furniture
and appurtenance
Net
Ongoing
Benefit***
$52,000 - $130,000 per year $46,200 - $123,700 per year Sources: HdL Companies, City of Manhattan Beach Finance Department, City of Manattan Beach Community Development Department, EPS *Sales increase estimate is based on averages from analyzed sales tax data. **Larger business owners reported anecdotally that maintenance costs for cleaning, landscaping, etc. could be as high as $18,000 per year. *** Excludes cost of temporary dining deck and annual permit administrative fee Economic & Planning Systems
PROGRAM CONSIDERATIONS / RECOMMENDATIONS
Economic & Planning Systems 23
CAVEATS & CONSIDERATIONS FOR FUTURE
Long-Term program results may vary depending on size
and location of program
Unclear if incremental benefits hold true if program
size differed substantially from the temporary
outdoor dining program.
– Relationship of impacts may not be linear with amount of space (eliminated for outdoor dining)
– Removing too many parking spaces could have a more
detrimental impact on parking availability
– A smaller program may not have as large an effect on
demand without synergistic effect of multiple spaces
Revenue by location expected to vary significantly
– Owners reported anecdotally that dining sales could be as high as $500,000/year per parking space (equivalent
to $5,000/year in sales tax revenue) on a prime corner
Economic & Planning Systems 24
OUTDOOR DINING PROGRAM CONSIDERATIONS
Business owners generally do not favor strict caps on participation; prefer it be open to all where space is available Business owners would like to align outdoor dining hours to (indoor) restaurant hours to minimize operational challenges and guest frustrations
Business owners interested to see the outdoor dining
program provide some certainty and possibly emulate
existing programs, such as:
– Sidewalk encroachment permits where annual renewals
are allowed if no problems have occurred
– Liquor license where permit length is indefinite if no violations
– Use permits for live music, which remain valid even if restaurant is sold
Economic & Planning Systems 25
SOME NEARBY CITIES CHARGE ONGOING FEES
Cities With Ongoing (Monthly) Use fees
Hermosa beach: outdoor dining program updated Oct 2023 – Tiered fee schedule – $2.50 to $6 per sq. ft. per month based on hours, location, and alcohol service – One-time fees for application & permit, plus $397.70 annual renewal fee Beverly Hills: tiered fee schedule depending on location (defined by street) – Monthly permit charges for sidewalk dining ($1.05 - $1.80 per sq. ft.) or for parklet dining ($1.55 - $2.05 per sq. ft.) – One-time fee for application, permits, sewer facility charges, plus $647 annual renewal fee Cities with No Monthly Fees
El Segundo
– One-time maintenance deposit plus outdoor dining application fee ($3,796.73) and annual renewal charge ($1,026.25) Los Angeles: al fresco dining program updated in Dec 2023 – One-time fees of $1,349 - $2,056 for application & permit, plus one-time sewer facility charge per seat (approx. $1,200 - $2,000 per parking space), and review and permit fees for any new structures 26 POTENTIAL PROGRAM FEE* OPTIONS
Under Proposed Long Term Program, all right- of-way outdoor dining would function as sidewalk dining and should have a consistent fee structure *Proposed fee is an ongoing charge similar to the sidewalk dining program fee of $3/sq. ft./month. Other City fees may be applicable and used in place of or in addition to an outdoor dining permit fee (e.g., encroachment, utility, or impact fee). To the extent they are imposed on applicant, the financial implications will be similar. The structure and amount of any new fee will be subject to applicable State laws related to the imposition of local fees Economic & Planning Systems
Flat / No Fee Tiered Fee
Description • Similar to current sidewalk dining
• Flat charge per sq. ft.
• Charge varies depending on type of use,
amount of space, operating hours, etc.
Pros
• Simple approach
• Easy to understand
• Easy to comply
• Easy to administer
Creates option to charge higher rates:
• For additional space beyond base amount
• For late night use
• For specific business types/locations
Could “cover costs” associated with certain
activity – such as late-night patrons
Con • Larger, more profitable businesses
pay the same as smaller ones
• More complex tracking, review,
enforcement may offset small fiscal benefit
Economic & Planning Systems 27
OUTDOOR DINING USER FEE RECOMMENDATIONS
Fee should be set in line with existing fees and in consideration of retail market rents to ensure participation and perceived fairness Current flat fee amount ($3/sq. ft./mo.) likely to be perceived as reasonable and fair (per stakeholder input)
– Fee provides approximately $219,500 in annual revenue for proposed program (6,097 sq. ft.) – Fee is already higher than other jurisdictions
Participation may drop as monthly outdoor dining fee approaches $5/sq. ft. in Downtown or $4/sq. ft. in North MB
– Some high-revenue businesses might be willing to pay higher amounts – EPS expects that most restaurants will not be willing to pay more than the rent on indoor space:
• Large restaurant owners report monthly rents of $7 to $11 per sq. ft. for indoor retail space • Average market rents per CoStar are $5 per sq. ft. (Downtown) and $4 per sq. ft. (North MB). The highest quality (Class A) properties are approximately $9 per sq. ft.
• In general, retail rent can vary significantly by location, foot traffic, and quality Tiered fee could be used to address stakeholder or revenue concerns, if needed
PARKING SUPPLY & MANAGEMENT IMPLICATIONS
Economic & Planning Systems 29
LIMITED AVAILABLE PARKING DURING PEAK PERIODS
Based on Fehr & Peers data collected on busy summer
weekends in 2023, system appears to be very highly utilized (above 85%), with minimal capacity during peak periods
– Busiest day is Saturday - typically above 90% occupancy 11am – 3pm in summer
– Sundays also very busy, except evenings
– Friday peaks at 1pm; ~ 70-80% occupancy at other times Low available capacity at peak periods suggests possible benefit from parking management/capacity strategies
Bicycle parking is also very highly utilized throughout Study Area
– Bicycle riders frequently use non-rack objects to park when racks are full or on blocks without racks
Economic & Planning Systems 30
DOES THE CITY NEED TO MAKE UP FOR LOST PARKING?
Loss of street parking has
had a relatively small impact
on overall parking supply
Demand from additional
visitors had a larger impact
on parking utilization
– Parking may be harder to
find at busiest times with
outdoor dining
Increase parking revenue
and sales tax revenue from
outdoor dining could be
used to address demand
with parking management
and/or parking supply
Economic & Planning Systems 31
POTENTIAL FINANCING SOURCES TO ADDRESS PARKING DEMAND
Both Downtown and North MB rely on shared (public) parking supply Existing BIDs historically helped manage services in each district and could potentially manage/finance parking supply
– Existing Downtown Business Improvement District (BID)* generated $112,800 in FY 2022-23
– North Manhattan Beach Business BID generates approx. $25,000 per year. Meter revenue provides significant source of funds: lot and street meters in Study Area generated more than $4.5 million in revenue in 2023 – Potential to generate even more revenue with higher/demand-based pricing, considering street meters on many blocks are 100% full almost all day on busy summer weekend (Fri-Sun), when data was collected
*Managed by Downtown Manhattan Beach Business and Professional Association. The BID is funded through an 80% surcharge on the annual business license tax for its members, up to a maximum of $600 per business Economic & Planning Systems 32
COST OF PARKING ALTERNATIVES FOR STUDY AREA
Type Estimated Cost Pros Cons
Signage,
Enforcement, Etc. LOWER Varies
Typically more cost effective than new supply,
benefits businesses; some costs can be
recovered
May require education, may be less
popular than adding more parking
Bicycle Parking $400 per 3 racks
(plus labor cost for installation)
1 vehicle = 10 bike spaces; promotes
healthy/low-emissions travel; best cycling
weather aligns with peak parking periods
May take away sidewalk/
parking space
Bicycle Valet Up to $1000 per day,
depending on need
Encourages bicycling by guaranteeing safe,
sufficient parking for bicyclists
Requires ongoing staff costs to maintain
program; may be best suited for events
Shared Parking Primarily staff time
(plus any negotiated cost of parking)
Utilizes existing supply to increase effective
capacity; may work well for busy weekend days
Limited options and depends largely on
private sector participation
Valet Parking
(Free or Subsidized)
$500 - $2,500+ per day,
depending on need
May help utilize/increase existing capacity; may
add cachet and help visitors during the peak
periods; may generate some revenue
Does not add new capacity; must be
well-located and may take
sidewalk/parking space
Shuttle or Bus
Service
(on-demand or fixed route)
$150K+ per year operating
expenses**
(plus, $100K-600K per vehicle)
Could also serve nearby residents, who might
choose not to drive; contracted operators (e.g.,
Circuit) may be able to lower costs
High operating cost, less convenient for
drivers due to longer travel time; may
take away sidewalk/parking space
New On-Street
Parking Spaces
(through street modification)
Varies significantly
(involves major
capital expense)
Parking is well-located,
in front of businesses
Takes up limited right-of-way that
could be used for circulation, walking,
biking, outdoor dining, etc.
New Parking
Garage Spaces HIGHER $50-93K* per space
(plus, cost to purchase land)
Increases capacity at desired location; often
popular with residents/shoppers
Very high upfront & maintenance cost,
long construction timeline, few
available sites
*Based on Rider Levett Bucknall cost index for above- and below-ground parking ($110 - $205 per sq. ft.), plus 20% soft cost and 10% contingency. Assu mes 350 sq. ft. per space. **Costs can be significantly higher based on route length, frequency, and operating hours. Line 102 in Redondo Beach costs ~$ 1,000,000/yr to operate 6am-8pm on 30-45 min. headways.
Lower end operating estimate is based on 30% labor cost and approx. $50,000 fully loaded salary for a single driver to operat e on busier weekends/evenings only.
Economic & Planning Systems 33
LOW-COST STRATEGIES PRESENT OPPORTUNITY
Bicycle parking may be better use of
limited real estate than vehicle parking
– Study Area has high bicycle parking utilization
– Opportunity exists to strategically place bicycle
parking or convert vehicle parking which may
improve sales, reduce improper bicycle parking,
and sidewalk obstruction
– Bicycle parking is more efficient use of space to
accommodate visitor parking demand
Stakeholder input suggests
well-enforced, short-term
parking could offset challenges
– Short-term parking near businesses with pick-up/drop-off customers could offset impact of limited parking availability Economic & Planning Systems 34
REFERENCE: FISCAL IMPACT ESTIMATING METHODOLOGY
Sales tax impacts
– Annualization & Seasonality Adjustments
• EPS determined an annualization factor that accounts for seasonal variations by comparing Q2-Q 3 data to a full calendar year over the period 2019-2023, excluding data from 2020 due to pandemic anomaly, and substituting Q4 2022 for missing Q4 2023 data
– Participating Businesses
• Low end estimate: EPS estimated what Q2-Q3 2023 sales tax revenue would have been if participating businesses had kept pace with countywide sales tax trends
• High end estimate: EPS estimated what Q2-Q3 2023 sales tax revenue would have been if participating businesses had kept pace with citywide sales tax trends
• EPS then applied the seasonality adjustment to annualize the sales tax data – Nonparticipating Businesses
• Low end estimate: EPS estimated what Q2-Q3 2023 sales tax revenue would have been if non-participating businesses had kept pace with countywide sales tax trends
• High end estimate: EPS estimated what Q2-Q3 2023 sales tax revenue would have been if non-participating businesses had kept pace with citywide sales tax trends
• EPS then applied the seasonality adjustment to annualize the sales tax data Parking revenue impacts
– Annualization & Seasonality Adjustments
• EPS determined an annualization factor that accounts for seasonal variations by comparing Q2-Q 3 2022 data to 2022 totals – Revenue Amounts
• “Revenue from Lost Spaces” is equal to on-s treet parking revenue totals, annualized and seasonally adjusted • “Revenue from Additional Visits” is equal to off-s treet lot parking revenue totals, annualized and seasonally adjusted